This tug-of-war began four years ago, when the EU proposed an "eastern partnership" with Ukraine as well as Armenia, Azerbaijan, Georgia, Moldova and Belarus.

Russian President Vladimir Putin's decisive move came on Nov. 9. That day, after years of courtship, and several months of promises and threats, he met with Ukrainian President Viktor Yanukovych at a military airport near Moscow. The meeting was so clandestine the Russians initially denied that it had taken place at all.

Before that point, the plan had been for Yanukovych to sign a 900-page association agreement, a sort of engagement contract, with the European Union in the Lithuanian capital of Vilnius on Nov. 29. But in early November near Moscow, Putin seems to have sealed an alliance with Ukraine, preempting his rivals in Brussels. And last Thursday Yanukovych postponed the signing of the EU agreement indefinitely.

After giving temporary asylum to whistleblower Edward Snowden and brokering a deal to have Syria give up its chemical weapons, it was Putin's third recent victory over the West, albeit probably not a permanent one. After all, Yanukovych's agreement with Putin is a marriage of convenience, not a marriage of love.

Europe's 'Eastern Partnership' Dream

This tug-of-war began four years ago, when the EU proposed an "eastern partnership" with Ukraine as well as Armenia, Azerbaijan, Georgia, Moldova and Belarus. The EU offered cooperation, free trade and financial contributions in exchange for democratic reforms. Officials in Brussels spoke enthusiastically about the emergence of an historic Eastern European policy not unlike former German Chancellor Willy Brandt's rapprochement with the Warsaw Pact countries in the 1970s. The planned partnership agreements were intended to facilitate visa-free travel, reduce tariffs and introduce European norms. The only thing that was not offered was EU membership.

The EU's other goal, even though it was not as openly expressed, was to limit Russia's influence and define how far Europe extends into the east. For Russia, the struggle to win over Ukraine is not only about maintaining its geopolitical influence, but about having control over a region that was the nucleus of the Russian empire a millennium ago. The word Ukraine translates as "border country," and many feel the capital Kiev is the mother of all Russian cities.

This helped create Cold War-style grappling between Moscow and Brussels. The Russian president, hardened by his fights in the Kremlin, is more adept than EU bureaucrats at manipulating people with venality and affections. None of the top European politicians made a serious effort to win over Ukraine, with neither German Chancellor Angela Merkel nor European Commission President José Manuel Barroso flying to Kiev to convince its wavering president.

'Unprecendented Pressure' from Russia

"I believe the unprecedented pressure from the Russians was the decisive factor," says former Polish Prime Minister and intermediary Aleksander Kwasniewski. "The Russians used everything in their arsenal." Elmar Brok, chairman of the foreign affairs committee in the European Parliament, says: "Yanukovych kept all options open until the end, so as to get the best possible deal."

The official reason for the agreement's failure is Yulia Tymoshenko, the opposition politician who has been in prison for the last two years. The EU had made her release a condition of the agreement. Yanukovych was unwilling to release his former rival, and last week the parliament in Kiev failed to approve a bill that would have secured her release.

But then there are the financial incentives. In the end, the Russian president seems to have promised his Ukrainian counterpart several billion euros in the form of subsidies, debt forgiveness and duty-free imports. The EU, for its part, had offered Ukraine loans worth €610 million ($827 million), which it had increased at the last moment, along with the vague prospect of a €1 billion loan from the International Monetary Fund (IMF). Yanukovych chose Putin's billions instead.

The EU had been banking on its radiant appeal, and on its great promise of prosperity, freedom and democracy, but now Brussels must confront the fact that, for the first time, an attempt at rapprochement was rebuffed because the price was wrong. "If Yanukovych doesn't want to make a deal, then he simply doesn't want to," says Brok.

Battle of the Unions

The EU's eastern partnership had gotten off to a rocky start even before the Ukrainian incident. Belarus dashed the EU's hopes it would join when protesters were violently suppressed after the reelection of President Alexander Lukashenko in 2010. Armenia called off an association agreement with the EU this September.

In the case of Ukraine, it initially seemed as if the Europeans' rational arguments would prevail over Russia's threatening gestures. According to an internal EU analysis, joining the "Eurasian Union" -- a Russia-backed proposed political and economic union including Russia, Tajikistan, Kazahkstan, Belarus and others -- would severely limit Ukraine's sovereignty. Once such a union had been formed, Kiev would no longer be able to enter into any other free trade agreements without Moscow's approval. An alliance with Moscow would thus have the exclusive nature of a marriage. The EU's eastern partnership, in contrast, would still allow Ukraine to enter into other alliances.

And Yanukovych, who has been considered a puppet of the Kremlin, even implemented many of the reforms demanded by the EU. The legal system and criminal law were modernized, trade restrictions were reduced and a few political prisoners were released. "He implemented more reforms than the pro-Western predecessor regime under Tymoshenko," says an EU negotiator.

EU Hopes Dashed

But it turns out those reforms didn't go as the EU hoped. According to the Freedom House organization, democratic basic rights in these eastern partnership candidate nations have not been strengthened in the wake of EU reform demands. Instead, they claim, many of the reforms were implemented half-heartedly and governments only consolidated their power.

The Europeans had mistakenly believed Kiev would automatically turn to the West. After all, isn't half of the population in favor of closer ties with the EU? And aren't there more Ukrainian immigrant workers living in the West than in Russia? They based their argument on economic sustainability, believing they could convince Yanukovych with the prospect of long-term growth rates of at least 6 percent. By contrast, a customs union with Russia would reduce Ukraine's economic growth in the long term.

But in truth, the most important goal for Yanukovych -- who may come across as unsophisticated, but is in fact a shrewd poker player -- is to hold onto power. In order to be reelected in 2015, he needs rapid economic improvement. Ukraine has slid into recession and could even be insolvent soon. The rating agencies have repeatedly downgraded the country's credit rating. Besides, Ukraine is dependent on Russian natural gas, and Moscow has already flexed its muscles by turning off supplies in the winter on three occasions.

This is why Yanukovych needs the Putin who in recent months has made the consequences of an EU deal unmistakably clear to Ukraine. In August, Russian officials began painstakingly inspecting trucks from Ukraine bringing goods across the border into Russia. Ukrainian oligarch Viktor Pinchuck was barred from importing steel pipes to Russia, and a former cabinet minister was prevented from selling his chocolate in the country.

These measures have led to a 25 percent decline in exports since 2011. Ukraine exports a third of its goods to Russia and other former countries of the former Soviet Union, and only 25 percent to the EU. Russia also threatened that it would require Ukrainians to apply for visas to travel to the country in the future.

Three days after the secret meeting in Moscow, Ukrainian oligarchs, apparently in consultation with the Kremlin, asked Yanukovych to postpone signing the EU association treaty by a year.

Zurkov the Manipulator

The Kremlin made it clear the harassment could become permanent. Sergei Glazyev, Putin's adviser for the economic reintegration of the republics that gained their independence after the collapse of the Soviet Union, predicted that Kiev would experience an "economic disaster" if it signed the agreement with the EU. "Ukraine is sacrificing its sovereignty," he said threateningly at a conference on the Crimean Peninsula, which is former Russian territory.

Vladislav Zurkov -- the Kremlin's former main ideologist, who had fallen out of favor but was brought back by Putin two months ago -- was sitting in one of the back rows. His mission was to help Moscow regain its control over the countries of the former Soviet Union.

When someone like Zurkov appears at a meeting, it means intrigues are under way. In Russia, Zurkov has founded parties and let them fade away based on Putin's needs. He could do the same thing in Ukraine, by siphoning off Yanukovych's pro-Russian voters and all but destroying Yanukovych's chances of reelection.

It is unclear whether Putin had to voice all of these threats in his meeting with Yanukovych. It was probably no longer necessary. Yanukovych had already understood that his only hope for political survival was to throw in his lot with the Russians.

The threats were also accompanied by promises. Putin held out the prospect of loans, lower gas prices and debt forgiveness with Russian energy giant Gazprom, to which Ukraine owes $1.3 billion.

Pipeline Under Threat

Another project could suffer a fate similar to that of the association agreement: a natural gas contract, negotiated under the auspices of the EU, which was supposed to be signed on Nov. 22. Once again, everything seemed to have been agreed upon, but then the Ukrainians were suddenly saying minor technical details had yet to be ironed out. "This has already been going back and forth for a year now," says one of the frustrated lead negotiators.

Everyone had expected the agreement to be signed, because it would have enabled the Ukrainians to liberate themselves, gas-wise, from the clutches of the Russians, especially as they now pay significantly more for Russian gas than major Western companies, such as German energy conglomerate RWE.Under the new agreement, pipelines in EU member-state Slovakia would be rebuilt to allow for reverse gas flows, so gas destined for Western Europe could also be transported to Ukraine in the future.

But Yanukovych is hesitating. Because of the necessary upgrading work, the gas from the West could not begin flowing to Ukraine until next September. This would make the Ukrainians vulnerable to blackmail, at least this winter. And the negotiations over the new contract already seem to have helped Yanukovych, with the Russians signaling significant price cuts for Ukraine. It appears Yanukovych has played his cards right once again.

That is, if he can contain the political anger within Ukraine. On Sunday, the largest demonstration in the country since 2004's Orange Revolution took place in Kiev. According police estimates, 23,000 people protested the withdrawal from the EU pact negotiations, including boxing champ Vitali Klitschko. Organizers place the number at over 100,000. Yulia Tymoshenko's daughter, Eugenia, personally reached out to Angela Merkel for help in an interview with Germany's Bild tabloid, saying that, if nothing was done, her mother would die.

What Now?

In Brussels, European Commissioner for Enlargement Stefan Fule tried to compose himself last Friday. "Only when the summit officially begins will we know, once and for all, whether or not Ukraine intends to sign." But no one expects a quick agreement anymore. Even Fule is already thinking about possible next steps. He also seems somewhat at a loss when he says that the EU has no interest in engaging in a competition with Russia -- as if one hadn't already happened.

"It's difficult to say when the negotiations will be resumed," says middleman Kwasniewski. The European Parliament will be elected next year, there will be changes at the European Commission, and a presidential election in Ukraine in 2015. "It seems to me that the pause is going to be longer rather than shorter," Kwasniewski adds.

P.S by MAN: The situation in Ukraine is bad, when it split from the Soviet Union IT HAD NO DEBT AT ALL, but after liberation and privatization of its economy it had debt in the billions and billions and not being able to pay back; Ukraine's dept keeps increasing. Its people left by the millions & millions seeking work outside Ukraine. Its girls and women went into prostitution so they can survive, Turks specially are crazy visiting Ukraine for blond beauty of Ukrainian women ready to sell their bodies in sex for money.Russia is the few countries in the world now that has no debt or just a little; Russia is so large (larger than USA) that minerals, gas and oil in their land is enough to keep Russia debt free.

VILNIUS, November 29 (RIA Novosti) – Georgia and Moldova signed agreements with the European Union at a summit Friday as another ex-Soviet country, Ukraine, confirmed it would not go ahead with a similar deal.

The agreements with Georgia and Moldova, which are set to be ratified next year, put the two countries on a path to stronger economic ties with Europe amid a wider EU push to integrate Eastern European and Southern Caucasus nations formerly ruled from Moscow.

“The agreements initialed today are the most advanced of their type ever negotiated by the EU,” said European Commission President Jose Barroso during the signing ceremony, according to a copy of his speech.

“From now on, our economies and a growing number of sectors in our societies will be linked. We will increasingly work together.”

The Eastern Partnership summit in Lithuania began Thursday with EU heads of state and leaders from Armenia, Azerbaijan, Belarus, Ukraine, Georgia and Moldova in attendance.

The European Union and the Republic of Armenia have adopted a joint statement as a result of the EU Eastern Partnership summit in Vilnius, Lithuania, in which they said that they have completed negotiations on an Association Agreement, including a Deep and Comprehensive Free Trade Area, but will not proceed with its initialing due to “Armenia’s new international commitments.” They also agree on the need to update the EU-Armenia ENP Action Plan.

“The EU and Armenia enjoy close links and reconfirm their commitment to further develop and strengthen comprehensive cooperation in all areas of mutual interest within the Eastern Partnership framework,” the statement published by the Ministry of Foreign Affairs of Armenia reads.

“Based on common values, both sides are committed to further cooperation aimed at the continuous improvement of democratic institutions and judiciary, the promotion of human rights and rule of law, good governance, the fight against corruption, the strengthening the civil society, the further improvement of the framework for enhanced trade and investments, the continued implementation of the mobility partnership and increased sectoral cooperation.

“Based on their common endeavour to build upon the existing framework of cooperation, the EU and Armenia stress the importance of revisiting the basis for their relations.”

"at the summit, an almost fearful awe of Russian President Vladimir Putin's power politics could be detected. Unlike the EU's own mistakes, his tactics are not under constant scrutiny, and when it comes to crossing the finishing line, he appears to be more clever at power politics"

It is not just the failure of the agreement that is on display in Vilnius, but also the failure of the EU's strategy toward Eastern Europe as it devolves into mere helpless announcements.

Officials admit that the task is a complicated and time-consuming one, but they still believe that controversial leaders like Yanukovych must eventually take the plunge toward Europe. "The door is open," said Chancellor Merkel after her 40 minute-long meeting with the Ukrainian president, though she added that the opposition there cannot be forgotten, either. At the chancellor's bidding, her foreign policy adviser Christoph Heusgen met with opposition leader and heavyweight boxer Vitali Klitschko in Vilnius to learn more about reprisals against Ukrainian civil society.

But it is also clear that accusations against Ukraine's leaders will accomplish little. The huge country seems torn between a western part that looks towards Brussels and another region that remains highly influenced by Russia. The mawkishness of its president, who is reputedly corrupt, is also too great, with Yanukovych complaining in the conversation with Merkel about the International Monetary Fund's refusal to simply give him billions in loans without conditions.

But Europe's helplessness is just as clear. Kiev's rejection of the agreement has driven a stake through the heart of the "Eastern Partnership." Although Georgia and Moldova both signed similar agreements with the EU in Vilnius, the latter is tiny and the former a rather opaque partner.

EU: Have you given rights to gays and have you now recognized and officially inserted into your national Encyclopedia that most important of all term "LGBT", because sexual preference is absolutely central to the economic well being of all citizens, great and small?

Petitioning Country Rep: "Well, we plan to, but what incentives can you give us and what benefits can we get on educational and vocational training opportunities?"

EU: "Well, as long as gays have the same rights and homosexual awareness education curricula are in place, then we can discuss the actual benefits."

Petitioning Country Rep: "??? Premature exposure to homosexuality is against our societal norms!"

EU: "Well, then, you will have to adjust your societal norms accordingly."

Petitioning Country Rep: "What about the benefits of market integration, lowering of export tariffs, assistance in implementing safety and industry standards?"

EU: "What about immigration? We here at EU believe that every member country has to have its share of Somalis. We think your country should allow the immigration of 40,000 Somali, 30,000 Haitians, 20,000 Nigerians, and 2 Armenians, but make sure you drag the ARmenians through your immigration systems and legal systems for at last 10 years prior to offering them the first work permit, OK. While you do that, make sure the Somalis especially get subsidized housing, expedient immigration status follow-up, free medical, free schooling, and the ability to roam the streets even upon acculumation of a criminal record. These are our conditions!"

Petitioning Country Rep: "We can barely feed our own populations, and our statehood depends on its homogeneity, as it has for centuries!"

EU: "Nationalism is something we do not accept nor condone. We are of the Kalergi persuasion, enlightened assimilationists! You must adjust your national policies accordingly!"

Gagik Mianasyan: Nagorno Karabakh will also be part of Customs Union
17:20 14
by Hasmik Dilanyan
Public Radio of Armenia

“The Customs Union is overwhelmingly an economic structure, but today’s circumstances allow us to insist that it has a political component, as well,” Gagik Minasyan, head of the National Assembly’s Standing Committee on Financial-Credit and Budgetary Affairs, told reporters today. He explained that it is connected with the Nagorno Karabakh.

“The Nagorno Karabakh Republic and the Republic of Armenia are states with an extremely high level of integration,” Minasyan said, adding that it’s crucial to decide the issue of Nagorno Karabakh in case Armenia joins the Customs Union.

Gagik Minasyan recalled the Armenian President’s statement that there could never be a customs border between Armenia and Karabakh. He drew attention to an important event that took place at the end of 2013. On December 22 Russian President Vladimir Putin ratified two international agreements, eliminating all customs duties with Abkhazia and South Ossetia. In fact, the territories of these two unrecognized states were recognized by Belarus and Kazakhstan as areas of the Customs Union, Minasyan said. According to him, this is an important precedent for Nagorno Karabakh.

“The heads of state, who previously stood against Nagorno Karabakh’s accession to the Customs Union, have actually got used to the idea. That means, when Armenia joins the Customs Union, NKR will automatically become part of the CU, although unrecognized by Kazakhstan and Belarus, as it was the case with Abkhazia and South Ossetia,” Minasyan said.

Inclusion of Abkhazia and South Ossetia into customs union is important precedent for Nagorno-Karabakh – Armenian lawmaker
Feb. 2. 2014

YEREVAN, February 14. / ARKA /. Russian president Vladimir Putin’s decision to treat unrecognized Abkhazia and South Ossetia as subjects of the Customs Union is an important precedent for Nagorno-Karabakh Republic, Gagik Minasyan, head of an Armenian parliament committee on finance and budget issues from the ruling Republican Party of Armenia, told a news conference today.

As previously reported by Russian news agency RIA Novosti, on December 22, Putin signed laws on ratification of trade agreements with Abkhazia and South Ossetia.

According to Minasyan, these laws in fact have removed all customs barriers between the Russian Federation and the two breakaway Georgian provinces and the territories of Abkhazia and South Ossetia, not recognized by two other members of the Customs Union- Kazakhstan and Belarus as independent republics- have become the territory of the Customs Union.

Minasyan said that this fact has become an important precedent for Armenia in the context of the Nagorno-Karabakh problem.

Speaking at a Customs Union summit late last year that approved a ‘roadmap’ for Armenia’s accession to the trade bloc Kazakh president Nursultan Nazarbayev expressed reservations about Armenian membership because of the unresolved Nagorno-Karabakh conflict.

“The question of the Custom Union’s border, where it will pass in Armenia, remains open. Therefore, we will sign the roadmap with the colleagues but with a special opinion that will be reported to the Armenian side,” Nazarbayev said at a meeting with Russia’s Vladimir Putin and Belarus’ Aleksandr Lukashenko in reference to Armenia’s border with the unrecognized Nagorno-Karabakh Republic and the absence of any Armenian customs posts there.

According to Minasyan, Nazarbayev’s reservations applied similarly to Abkhazia and South Ossetia.
He said after Armenia joins the Russia-led trade union Nagorno-Karabakh will also be part of it, even being not recognized by Belarus and Kazakhstan, as is the case with Abkhazia and South Ossetia.
This, according to him, will mean an economic recognition of the Nagorno-Karabakh Republic.

Minasyan said also that Armenian leaders have repeated that Armenia will not tax goods coming from Karabakh even after joining the trade bloc.

EU Association suggests goods, capital and services without the right to free movement. No such restrictions in case of the Customs Union

The expected economic affects of Armenia’s accession to the Customs Union
17.Feb.2014
Hasmik Dilanyan
Public Radio of Armenia

Armenia’s accession to the Customs Union (CU) and the Single Economic Space (SES) will have a positive effect on its economy. This conclusion was suggested in a recent report entitled “Armenia and the Customs Union: Assessing the Economic Effect of Integration” published by Eurasian Development Bank’s (EDB) Center for Integration Studies. Economist Ashot Tavadyan, who headed the research group, met with reporters today to present the expectations from Armenia’s membership in the Customs Union.

He said it is the best choice for Armenia now as it provides conditions for the growth of the GDP and improvement of the trade balance.

According to him, Armenia will enjoy all the possibilities offered by the Customs Union, particularly with regard to direct investments in its infrastructure and production, a decrease in energy prices, as well as a better environment for Armenian labor migrants, which altogether could secure a 4 % additional GDP growth.

Tavadyan said about $0.5 million will be invested in the North-South railway project, another $200 million will be spent on the roads.

Regarding Armenia’s relations with the EU, he said “Europe suggests goods, capital and services without the right to free movement.” “There are no such restrictions in case of the Customs Union,” the economist added.